Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Headline Retail Sales Down In August 2016 - But Our Analysis Says Otherwise.

Retail sales were down according to US Census headline data - and well under expectations. Our analysis paints a much better picture of retail sales - with the three month rolling averages showing 2.5 % year-over-year growth. However, retail sales per capita is now showing no growth. Using the unadjusted data and the three month rolling averages - this was not a bad report with growth up 2.5 % year-over-year.

Backward data revisions were slightly up.

Econintersect Analysis:

  • unadjusted sales rate of growth accelerated 2.1 % month-over-month, and up3.1 % year-over-year.
  • unadjusted sales 3 month rolling year-over-year average growth accelerated0.5 % month-over-month, 2.5 % year-over-year.
Advance Retail Sales Year-over-Year Change - Unadjusted (blue line), Unadjusted with Inflation Adjustment (red line), and 3 Month Rolling Average of Unadjusted (yellow line)

  • unadjusted sales (but inflation adjusted) up 2.1 % year-over-year
  • this is an advance report. Please see caveats below showing variations between the advance report and the "final".
  • in the seasonally adjusted data - there was only strength in food services and clothing.

U.S. Census Headlines:

  • seasonally adjusted sales down 0.3 %month-over-month, up 1.9 % year-over-year (last month was originally reported at 2.3 % year-over-year).

Retail sales per capita seems to be in a long term downtrend.

Year-over-Year Change - Per Capita Seasonally Adjusted Retail Sales

Seasonally Adjusted Retail Sales - All (red line), All except food services (blue line), and All except motor vehicles (green line)

The differences between the headlines and Econintersect are due to different approaches to seasonal adjustment (see caveats at the end of this post). Long and medium term trends always agree comparing the adjusted to the unadjusted data - it is the short term trends and month-over-month change where the conflict occurs.

Comparison of the Year-over-Year Census Seasonally Adjusted Retail Sales (blue line) and Econintersect's Unadjusted Retail Sales (red line)

Declines of short duration often occur in the seasonally adjusted series without a recession resulting.

Using employment as a gauge to check growth, employment in retail has been growing - but the rate of growth is slowing.

Retail Employment - Total Seasonally Adjusted (blue line, left axis) and Year-over-Year Change Unadjusted (red line, right axis)

And finally, as retail sales can be a component of determining a recession start date, the zero line of the graph below could be an indicator a recession was underway (or about to begin).

Retail Sales - Recession Watch Graph

Other Economic News this Week:

The Econintersect Economic Index for September 2016 is showing better growth for the second month in a row - but the rate of growth outlook remains weak. The index remains near the lowest value since the end of the Great Recession. There remain recession warning flags in some of the data we are reviewing..

Bankruptcies this Week: Golfsmith International Holdings, Privately-held Noble Environmental Power

Please visit our landing page for a summary of all of our analysis this past week.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.